Half will live to age 107

A World Economic Forum (WEF) white paper called “We’ll Live to
100—How Can We Afford It?” has some interesting data. To
begin, it breaks down life expectancy by birth year, showing a
different picture than we see from simple averages. Here are the
global numbers:

As far as I can tell, these estimates don’t consider the kind of
major life-extending breakthroughs coming in the next few years.
Rather, the methodology of the WEF paper seems to depend on
extending current trends.

Here’s another table showing the differences among major
countries for those born in the year 2007:

Again, this is astounding if correct. A Japanese child born in
2007, who is 10 years old today, has a good chance of living to
107. That will be the year 2114. Those in other developed
countries are not far behind.

Better yet, the coming
medical technologies will let us live to those ages or more
without the decades of physical and mental decline that are now
common. We’re not just increasing lifespans; we’re increasing
“health spans” too.

It is likely that you will live much longer and healthier than
you are currently planning to. Most of us will be happy with that
outcome. The bad news is that you will have to make your money
last those extra years.

Most won’t retire at 65

While this is wonderful news for humanity, it will bring some
challenges too. The world is not financially prepared to support
as many retirement-age people as it will have to sustain in
coming decades. We have some huge adjustments in store.

Specifically, we already have a huge
retirement savings shortfall, both public and private. Adding
millions more person-years to the equation will make the problem
much worse.

The WEF’s white paper tries to quantify how much worse the
personal retirement shortfall will be if current practices
continue. Here is the bad news in graphic form:

The bumps you see there are the differences between what is
necessary to fulfill obligations (defined as 70% of
pre-retirement income) and what has actually been saved or set
aside to do so. The darker blue is the 2015 gap, and light blue
is a 2050 estimate.

By 2050, the total shortfall in these eight countries alone will
be $400 trillion. That number is so absurd that I feel
very confident we will never have to face it. One way and
another, some promises will be broken. The only questions are:
whose and to what degree.

The present standard of retiring somewhere between ages 60 and 70
is not going to be sustainable when half the population lives to
80 or 90—which is already realistic today—let alone 100 or more.
It’s just not possible.

Your dream of hanging up the work clothes at 65 and going on
extended vacation will remain a dream until some later date.

But there is a solution

The solution may turn out to be something presently unimaginable.
We don’t know where technology will take us and what
opportunities it will create. We also don’t know what political
alliances can create.

What we do know is this: An unsustainable situation will not be
sustained. Retirement as we know it is
unsustainable. It will give way to something else, and maybe
soon.

Frustration is building in America because of the problems I
highlighted above, and we could well see an administration and
Congress that will push through a much less friendly VAT plus
income tax increases, not cuts.

Within 10 years, we are not only going to be thinking the
unthinkable, we will be doing the
unthinkable. And not just in the US, but all over the world.
The
unthinkable will be coming to a country near you, along with
unbelievable science-fiction-grade technology.